UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]    Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
       Act of 1934

                  For the fiscal year ended: February 29, 2000
                                       or
[ ]    Transition Report Pursuant  to Section 13  or 15 (d)  of  the  Securities
       Exchange Act of 1934


                         Commission File Number: 0-7900

                          LIFE PARTNERS HOLDINGS, INC.
                 (Name of small business issuer in its charter)

     Massachusetts                                               14-2488828
(State of incorporation)                                (I.R.S. Employer ID no.)

                                   6614 Sanger
                                Waco, Texas 76710
               (Address of Principal Executive Offices)(Zip Code)

          Issuer's telephone number, including area code: 254-751-9700

           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock (par value $0.01 per share)
                                (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the Registrant was required to file such reports),
and (2) has been  subject to such filing  requirements  for at least the past 90
days. Yes [X] No [ ]

Check  if there  is no  disclosure of delinquent  filers pursuant to Item 405 of
Regulation S-B contained  herein,  and  will  not be  contained,  to the best of
Registrant's   knowledge,  in   definitive  proxy   or  information   statements
incorporated by reference in Part III  of this  Form 10-KSB or  any amendment to
this Form 10-KSB. [X]

Revenues of issuer for year ended February 29, 2000:  $5,023,000

Aggregate market  value of voting stock  held  by non-affiliates  as  of May 15,
2000:  $52,752,100

Shares  of  Common Stock,  $.01  par  value,  outstanding  as  of  May 15, 2000:
10,000,000

DOCUMENTS INCORPORATED BY REFERENCE
The Company's  definitive  proxy statement in connection with the Annual Meeting
of Shareholders  to be filed with the Commission  pursuant to Regulation 14A, is
incorporated by reference into Part III of this report.


<PAGE>

        STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-KSB  CONCERNING OUR BUSINESS
PROSPECTS  OR FUTURE  FINANCIAL  PERFORMANCE;  ANTICIPATED  REVENUES,  EXPENSES,
PROFITABILITY  OR  OTHER  FINANCIAL  ITEMS,  GROWTH  IN  THE  VIATICAL  OR  LIFE
SETTLEMENT  MARKETS OR OUR  PROJECTED  SALES IN SUCH  MARKETS;  DEVELOPMENTS  IN
INDUSTRY   REGULATIONS  AND  THE  APPLICATION  OF  SUCH  REGULATIONS,   AND  OUR
STRATEGIES,  PLANS AND OBJECTIVES,  TOGETHER WITH OTHER  STATEMENTS THAT ARE NOT
HISTORICAL FACTS, ARE FORWARD-LOOKING  STATEMENTS" AS THAT TERM IS DEFINED UNDER
THE FEDERAL  SECURITIES LAWS. ALL OF THESE FORWARD LOOKING  STATEMENTS ARE BASED
ON INFORMATION  AVAILABLE TO US ON THE DATE HEREOF,  AND WE ASSUME NO OBLIGATION
TO  UPDATE  ANY  SUCH  FORWARD-LOOKING  STATEMENTS.  FORWARD-LOOKING  STATEMENTS
INVOLVED A NUMBER OF RISKS,  UNCERTAINTIES  AND OTHER  FACTORS WHICH COULD CAUSE
ACTUAL  RESULTS  TO DIFFER  MATERIALLY  FROM  THOSE  STATED IN SUCH  STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES  INCLUDE, BUT ARE NOT
LIMITED TO, THOSE  DISCUSSED IN THIS ANNUAL REPORT ON FORM 10-KSB,  PARTICULARLY
IN   THE    SECTIONS    ENTITLED    "ITEM    1--BUSINESS--RISK    FACTORS"   AND
"ITEM--7--MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS OF  OPERATIONS".  LIFE PARTNERS  DOES NOT  UNDERTAKE  ANY  OBLIGATION TO
RELEASE  PUBLICLY ANY  REVISIONS TO SUCH  FORWARD-LOOKING  STATEMENTS TO REFLECT
EVENTS OR  UNCERTAINTIES  AFTER THE DATE  HEREOF OR REFLECT  THE  OCCURRENCE  OF
UNANTICIPATED EVENTS.

                                     PART I


Item 1.  Description of Business

The Company

        General.  Life Partners  Holdings,  Inc.  ("We",  the "Company" or "Life
Partners") is the parent company  of Life Partners,  Inc.  ("LPI") and  Extended
Life Services, Inc. ("ELSI").  LPI is the oldest and one of the largest viatical
settlement  companies  in  the  United  States.  To  supplement  LPI's  viatical
business,  we acquired ELSI in January 2000 to engage in senior life  settlement
transactions,  a  strongly  emerging  market similar  to our viatical settlement
business.

        Our Viatical Settlement  Business.  LPI was incorporated in 1991 and has
conducted business under the registered service mark "Life Partners" since 1992.
To date, our revenues have been  principally  derived from fees for facilitating
the purchase of viatical settlement contracts. A viatical settlement is the sale
of a life insurance  policy  covering a person who is terminally ill. By selling
the policy,  the insured (a viator) receives an immediate cash payment to use as
he or she wishes.  The purchaser takes an ownership  interest in the policy at a
discount to its face value and receives the death  benefit under the policy when
the viator dies.

        As a leader in the viatical  settlement industry for almost a decade, we
match  viators  with  viatical  settlement   purchasers.   We  facilitate  these
transactions by identifying,  examining and purchasing  viatical  settlements as
agent for the  purchasers.  LPI locates  potential  viators through a network of
viatical brokers and through referrals and internet and print media advertising.
Brokers are typically  compensated based on a percentage of the face amount of a
viator's  policy,  which  is paid  upon the  closing  of a  settlement.  We have
long-term  relationships with most of the country's viatical  settlement brokers
and believe that these brokers adhere to applicable regulatory requirements when

                                       2
<PAGE>

conducting  their business.  In the fiscal year ended February 29, 2000,  broker
referrals  accounted for 76% of our viatical settlement  business,  of which 38%
was from one broker. We do not consider  ourselves to be dependent on any single
broker for referrals.

        Generally,  purchasers  are  introduced  to  us  through  a  network  of
financial planners, which we originate through referrals.  Most of the financial
planners have  long-standing  relationships  with us.  Although these  financial
planners  can  be  compensated  through  fee-based  consultations  paid  by  the
purchaser, most are compensated by us on the basis of the amount of funds placed
by a purchaser.  The compensation of financial planners may consist of cash paid
on settlement,  and in certain cases, through a stock option plan provided by us
based on the volume of a financial planner's activity.

        To purchase a viatical settlement, a prospective purchaser first submits
a purchaser  application  (available  on our website),  which  contains name and
address  and  background  information.  A  purchaser  will also submit an agency
agreement and special power of attorney (also  available on our website),  which
appoints us as a limited  agent of the  purchaser to act on his or her behalf in
purchasing a viatical settlement. Unless specifically waived by a purchaser, the
agency agreement limits our authority to policies issued by an insurance carrier
having an A.M. Best rating of A- or better, to policies beyond their contestable
period (generally two years or older),  and to insureds  diagnosed as terminally
ill and having a probable  life  expectancy  of 48 months or less. We issue each
financial planner a user identification  number and password which allows access
to our restricted  website  containing  lists of available  policies and medical
case  histories  (with  the  viator's  name and  other  identifying  information
redacted). We also make available to each financial planner standard disclosures
discussing the nature and risks of viatical  settlement  purchases.  A purchaser
can then,  in  consultation  with his financial  planner or other  professionals
available  to them,  select one or more  policies,  specify  the  portion of the
policy or policies to be purchased (to  diversify  their  positions,  purchasers
generally  buy  fractional  interests in one or more  policies and not an entire
policy),  and submit  electronically  or by fax a reservation  form. At the same
time, the purchaser  mails or wires the  acquisition  price and mails or faxes a
policy  funding  agreement to us. The policy  funding  agreement  identifies the
policy or policies to be purchased,  the acquisition  price, the  administrative
services provided,  and the escrow  arrangements for receipt and disbursement of
funds.  In essence,  we act upon the  instructions  of the  purchasers  as their
purchasing agent .

        For  the  protection  of  the  viator's   ownership   interest  and  the
purchaser's  monetary interest,  the viatical  settlements are closed through an
independent  escrow agent,  Sterling Trust Co.  ("Sterling"),  which is a wholly
owned subsidiary of Matrix Bancorp, Inc. (Nasdaq NMS: MTXC). Sterling will close
a purchase when it receives from purchasers  executed policy funding  agreements
and the entire acquisition price for a policy, it verifies that the policy is in
full force and effect and that no security  interest has attached to the policy,
and it receives from the viator a transfer of policy  ownership  acknowledged by
the  insurance  company.  Sterling  then pays the viator the offer price (net of
fees and costs).  After the closing,  we send confirmation of the transaction to
the purchaser as well as a copy of the assignment documents.

        After closing the viatical  settlement,  we generally  hold title to the
policy as nominee for the  purchaser.  Responsibility  for policy  premium costs
passes to the purchaser,  who typically funds the premium costs through deposits
with  Sterling.  A viator's  personal  information  is protected by  regulations
promulgated  by the Texas  Department of Insurance.  A purchaser  will receive a
copy of the policy and the transfer of ownership  (which has the viator named as
the  insured),  but  will  not  receive  viator  contact  information,  which is
available only to licensed viatical companies (like Life Partners).  We maintain
contact with viators and their health care providers through periodic  telephone
contact and mailings.  We also check social security  records on a monthly basis
to determine a viator's status.  We also notify purchasers in instances in which
the  premium  escrow  account  has  been  exhausted  so that the  purchaser  can
replenish the account to keep the policy from lapsing.

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<PAGE>

        We pioneered the  foregoing  transaction  design,  which is used by most
viatical settlement  companies today. Since our formation,  we have has assisted
in viatical  settlements  totaling  over $325 million in face amount of policies
giving us a 30% market share of the estimated $1.25 billion viatical  settlement
market.

        The  following  table shows the number of  settlement  contracts we have
transacted,  the aggregate face values and purchase  prices of those  contracts,
and the revenues we derived,  for our fiscal  years ended  February 28, 1998 and
1999 and February 29, 2000:
<TABLE>
<CAPTION>

                                         1998             1999            2000
                                         ----             ----            ----
<S>                                    <C>             <C>              <C>
Number of settlements                      152             187              138
Face value of policies (in `000's)     $18,996         $29,688          $20,030
Acquisition costs (in `000's)(1)       $13,566         $21,145          $14,507
Revenues derived (2)                   $ 1,289         $ 2,188          $ 2,254
---------------
</TABLE>

(1)     Acquisition  costs  include  amounts  paid to viators,  the fees we have
        received  and the  fees  paid to the  escrow  agent  and to  originating
        financial planners.
(2)     The revenues derived are exclusive of referring broker commissions.

        The Viatical Market and Competition. The market for viatical settlements
started in the early 1990's with the  beginning of the AIDS epidemic and rapidly
grew to a market estimated at $1.2 billion in 1999.1 In recent years, the market
has  stabilized  due to a number of factors.  Factors  moderating  market growth
include an increase in the life  expectancy  of persons  living with AIDS due to
improved  medical  treatments,  changes in insurance  policies  that provide for
pre-death cash benefits and the increase of government  regulation  with respect
to viatical settlements.

        Despite these factors,  we believe the viatical  settlement  market will
continue to slowly increase due to a number of contravening factors. While newer
medical  treatments have improved the longevity and quality of life of some, the
treatments appear to offer only incremental  improvements and do not promise the
ability to cure or suspend indefinitely the effects of the terminal illness. The
decline in the rates of AIDS  incidence  appears to be slowing (18% between 1996
and 1997 and 11% between 1997 and 1998),  which may suggest that the benefits of
newer  treatments have been largely  realized.  The number of people living with
AIDS increased 10% between 1997 and 1998, as reported by the U.S.  Department of
Health and Human  Services.  Over 90% of the viatical  settlements we facilitate
are with viators  afflicted  with AIDS. We have  responded to the effects of the
newer medical  treatments by adjusting our  underwriting  standards  upwards and
reducing the offer prices to viators.

        In response to the dramatic rise in viatical settlements,  the insurance
industry has responded with policy features  offering  various  pre-death,  cash
benefits  (sometimes  called  accelerated  death benefits).  While in some cases
accelerated  death  benefits may compete with  viatical  settlements,  we do not
expect  that the  availability  of  accelerated  death  benefits  to affect  the
viatical  market  significantly  at this time. The  availability  of accelerated
death  benefits is generally  more  restricted  than viatical  settlements.  For
example,  policies  often  limit  such  benefits  to  persons  who  have  a life
expectancy of less than one year, in contrast to viatical  settlements  that are
usually  available to persons with  remaining  life  expectancies  of up to four
years.  Viatical  settlements  generally offer viators greater amounts than they
would receive under accelerated death benefit provisions. An insurance company's
willingness to offer a competitive  accelerated death benefit, and the amount of
such benefit,  may be affected by imputed policy lapse rates.  The  availability

                                       4
<PAGE>

and amount of an accelerated death benefit negatively impacts lapse rates, which
could increase  policy rates.  The  competition  for new policies  limits policy
rates and may,  indirectly,  limit the  availability  and amount of  accelerated
death benefits.

        The viatical market has been negatively affected by some companies using
illegal or questionable business practices.  In response to these abuses and the
accompanying  adverse  publicity,  government  regulators -  particularly  state
insurance  regulators  - have adopted  regulations  requiring  the  licensing of
viatical brokers and settlement  companies,  mandated  disclosures to viators or
purchasers  or both,  and periodic  reporting  requirements,  and setting  forth
prohibited business practices. We believe these regulations have generally had a
positive  effect on the  industry  and on our ability to compete in the viatical
marketplace.  We are  licensed  as a viatical  company in the State of Texas and
information about us is available through the Texas Department of Insurance.

        The  foregoing  developments  have  decreased  the  number  of  viatical
settlement  companies - both those  purchasing for their own accounts and those,
like us, who act as agents for our  purchasers.  Industry trade groups  estimate
the number of viatical  companies  purchasing for their own account or as agents
for  purchasers  at about 50, and the number of  viatical  brokers at about 150.
Most of these are  companies  or  brokers  with  small  operations  and  limited
capital.  We  estimate  that  there are fewer  than ten  active  companies  with
operations  similar  to  ours.  While we  believe  we are the  largest  viatical
settlement  company  (based on face value of  policies  settled),  the  viatical
market is active and we experience  substantial  competition for new viators and
with respect to the prices we pay viators and referring financial planners,  and
the prices we set for the acquisition of policies. We believe the overall market
for viatical  settlements  should maintain its estimated level of  approximately
$1.2 billion.  In light of our experience in the market,  our purchaser  network
and continued  regulatory  pressure within the industry (from which we benefit),
we believe our market  share for  viatical  settlements  will  remain  steady at
approximately $20 to $30 million in face amount per year.

        In sum,  we believe  the  viatical  market is nearly  flat with  limited
growth potential.  That is why we have made a major shift in corporate  strategy
focusing on the newly emerging senior life settlement business which is expected
to experience explosive growth over the next ten years.

        Our New Senior Life  Settlement  Business.  To  supplement  our viatical
settlement  operations,  we entered the market for "senior life  settlements" in
1997  under  contract  with  ELSI.  We later  acquired  ELSI as a  wholly  owned
subsidiary to focus on this market which Conning & Co., an independent  industry
analyst,  estimates to be in excess of $100 billion in face amount. On behalf of
ELSI, we originated,  reviewed and underwrote  almost $600 million in face value
of  senior  life  settlements  in  1997.  In  underwriting  these  policies,  we
quantified  premium and life expectancy  risks,  but did not purchase any of the
policies for our own account or assume any risk associated  therewith.  A senior
life settlement differs from a viatical settlement in that the insured in a life
settlement is not  terminally  ill, is 65 years of age or older,  and has a life
expectancy of ten years or more.  Senior life settlements  appeal to persons who
purchased life insurance for income protection or estate planning, but no longer
need the insurance due to growth in their investment portfolios or other changes
in  circumstances.  The  settlements  also  appeal to  persons  who want to make
immediate gifts to their beneficiaries. In these instances, the insured may feel
the insurance is no longer needed.

        Senior life settlements  offer several  benefits.  The insured who sells
the  policy  receives  a cash  settlement  for a policy  he or she  believes  is
redundant and carries a benefit that he or she will never realize personally.  A
seller  avoids the  liability of future  premiums and may realize a tax loss (if
premiums  paid  exceed  the  cash  settlement),  which  can be  used  to  offset
investment  gains.  Because the policy stays in effect rather than lapsing,  the
life insurance  agent who sold the policy  continues to receive  compensation as
premiums are paid. The agent may also be the originating  settlement broker, who
is  compensated  for the  settlement.  Further,  the agent  may earn  additional
compensation  from the  reinvestment  of the seller's  cash  settlement in other
insurance or investment products, such as annuities.

                                       5
<PAGE>

        Since  sellers who  participate  in a senior life  settlement  have much
longer life  expectancies than viators (who are terminally ill), the amount paid
to  sellers  is less than in a viatical  settlement  typically  5% to 25% of the
policy face value.  Policies accepted by us in senior life settlements must have
a face  value of at least  $500,000.  In  determining  the price we will offer a
senior life seller,  we will  examine the policy terms to ensure  enforceability
and transferability and consider the type of policy (such as term,  universal or
variable life) and future premium  payments.  Our  underwriting  department will
calculate the seller's  remaining life  expectancy,  based on his or her age and
sex and  whether  the seller uses  tobacco  products.  In order to insure a high
degree of accuracy,  we have  engaged the  services of a  consulting  actuary to
review our underwriting procedures.

        We  use  a  network  of  referring   insurance,   legal  and   financial
professionals  to  originate  potential  sellers.  We have  created this network
through direct contact with managing  general  insurance agents as well as other
insurance  and  financial  professional  contacts  as well  as by  word-of-mouth
contacts. We also use print media advertising and our internet website.

        Since  senior life  settlements  are  long-term  investments  (typically
averaging 8-10 years), the predominant purchasers of senior life settlements are
institutional   investors  seeking   long-term,   portfolio   diversity.   These
settlements  represent  an  investment  alternative  since their  yields are not
dependent   upon  the  domestic  and  global  debt  markets  or  interest   rate
fluctuations.  For this reason, we established a division dedicated  exclusively
to  attracting  and   interacting   with  large  financial   institutions.   Our
institutional  division is managed by an  executive  experienced  in the capital
markets. Our Institutional  Funding Division will place our anticipated capacity
in  excess  of  four  billion  dollars  in  face  amount  per  year  with  other
institutional  investors through direct purchases and/or securitizations of bond
portfolios.

        In May  2000,  we  entered  into an  acquisition  agreement  through  an
intermediary for one of the top ten world banks. Under this agreement, ELSI will
originate,  underwrite  and process for  purchase by the  institution  up to one
billion dollars in face amount of senior  settlements  per calendar  quarter for
five years with a five year renewal option.

        While the  institution  does not have the  obligation  to purchase,  but
rather has a first right of refusal to purchase such policies processed by ELSI,
we believe the  institution  intends to purchase  the full amount of senior life
settlements  as provided  for in the  contract.  To our  knowledge,  this is the
largest  such  purchasing  agreement  ever  entered  into  in  the  senior  life
settlement industry to date.

        As stated in our press release dated May 3, 2000, we believe it may take
us six to nine  months  to reach the  desired  consistent  level of one  billion
dollars in face amount of senior life settlement policies per calendar quarter.

        As of this date, ELSI is receiving  senior life settlement  applications
totaling  approximately  ten million  dollars per day in face amount of policies
and we expect this amount to increase.  However,  many of these policies may not
pass our  underwriting  standards  for one  reason or  another.  Therefore,  our
ability to reach a goal of one  billion  dollars of face  value of  policies  is
dependent  upon  the  ratio  of  policies  presented  to  those  which  pass our
underwriting  standards,  the ratio of sellers  which accept our offer price and
the ratio of policies ultimately accepted for purchase by the institution.

        Should the  institution  decline to purchase any senior life  settlement
policy  presented  by ELSI,  ELSI is free to  present  the  policy  to any other
purchaser.  Further,  the institution has agreed never to purchase any policy it
has  declined  under our  agreement.  The  institution  has five working days to
accept or decline any policy submitted to it by ELSI under the agreement.

        The  procedures  we  use  to  facilitate  senior  life  settlements  are
substantially similar to the procedures we use in viatical settlements. Sterling
Trust acts as escrow agent and confirms receipt of the acquisition funds and all
necessary  agreements and authorizations,  and verifies that the policy is fully
paid and that no  security  interest  has  attached.  When  Sterling  Trust  has

                                       6
<PAGE>

completed these tasks, it distributes  funds to the seller and to us and sends a
purchase confirmation to the purchaser.  Unlike with viatical  settlements,  the
purchasing  institutions  generally  hold title to the  policies and perform all
post-sale services,  such as the payment of premiums and mortality tracking.  We
can perform post-sale services upon request.

        The Senior  Life  Market  and  Competition.  The market for senior  life
settlements is new, first appearing in 1997. Despite is newness,  Conning & Co.,
an independent  industry analyst,  has estimated the total face amount of senior
life settlements  purchased in 1998 at $0.5 billion and the potential market for
senior life  settlements  at over $100 billion.  The  attraction for senior life
brokers and settlement  companies lies in the potential size of the market.  The
market is expected to grow given predicted increases in the aging population and
their greater economic wealth.

        Most of the senior life settlement  purchases are presently conducted by
fewer than ten  companies.  Of these,  one is a subsidiary of a large  financial
institution  and has ready  access to capital.  We are  dependent  upon  outside
sources  of  capital  for growth in this  market.  The loss of an  institutional
purchaser could significantly affect our ability to compete in this market.

        Other  factors may  influence  the growth of the senior life market.  To
meet the needs of institutional  purchasers and the need for substantial amounts
of capital to service the market,  settlement  companies  may need to reduce the
risks of  senior  life  settlements,  especially  those  associated  with  "life
extension"  risks. One way to reduce this risk is to reinsure the life extension
risks. Other companies have explored  reinsurance  possibilities for senior life
settlements.  If viable  reinsurance  programs  evolve to reduce life expectancy
risk,  we expect to see other  senior  life  settlement  companies  securitizing
blocks of senior life  settlements,  which should increase capital  availability
and assist in the  development  of the senior life  market in general,  but will
also potentially increase competition.

Industry Regulation and Taxation

        General.   When  the  viatical  market  first  arose,  it  was  sparsely
regulated.   Due  in  part  to  abuses   within   the   industry,   which   were
well-publicized,  both  the  Federal  government  and  various  states  moved to
regulate the market in the in the mid-1990's. The regulations generally took two
forms. One sought to apply consumer  protection-type  regulations to the market.
This  application was designed to protect both viators and  purchasers.  Another
sought to apply  securities  regulations  to the market,  which was  designed to
protect purchasers. Various states have also used their insurance regulations to
attack instances of insurance fraud within the industry.

        Consumer Protection Licensing. The consumer protection-type  regulations
arose largely from the draft of a model law and  regulations  promulgated by the
National Association of Insurance  Commissioners (NAIC). At least 29 states have
now  adopted  some  version  of this  model law or  another  form of  regulation
governing  viatical  settlement  companies  in some way.  These  laws  generally
require the licensing of viatical providers and brokers, requires the filing and
approval  of viatical  settlement  agreements  and  disclosure  statements,  and
describes  the content of  disclosures  that must be made to potential  viators,
describes  various  periodic  reporting  requirements  for  viatical  settlement
companies and prohibits certain business practices deemed to be abusive.

        Licensing  in  Texas.  We  are  licensed  by  the  Texas  Department  of
Insurance. Under the Texas requirements,  we must file our transaction documents
with the state for approval, make certain disclosures to viators, offer a 15 day
right of rescission to the viator,  file certain  annual reports with the state,
and prohibits unfair business  practices.  Because all of our transactions occur
in Texas, the Department of Insurance has jurisdiction to investigate complaints
from any viator, irrespective of the state in which that viator lives.

        In 1999,  Texas became the first state to regulate life  settlements  as
well as viatical  settlements.  The Texas regulatory scheme for life settlements
is similar to the  regulatory  scheme  applicable  to viatical  settlements.  It
requires  licensing  of  providers  and brokers,  implements  various  reporting

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<PAGE>

requirements and mandates  required  disclosures.  Although the regulations have
not yet been implemented,  we will also be licensed as a life settlement company
as soon the regulations take effect.

        Securities  Regulations.   Despite  the  apparent  success  of  consumer
protection-type  laws in regulating the viatical  industry,  some states and the
Securities and Exchange Commission have attempted to treat viatical  settlements
as securities under Federal or state  securities laws. How viatical  settlements
will be regulated as securities and the effect of such  regulation on the market
is uncertain.  Such regulation will not affect senior life settlements involving
institutional  purchasers. In 1994, we were sued by the SEC, which asserted that
we were violating Federal securities laws by selling interests in life insurance
policies.  In 1996,  we received a  favorable  decision  from the U.S.  Court of
Appeals  for the  District  of  Columbia,  which  ruled  that our sales were not
securities  under the Federal  securities  laws. The SEC's request for rehearing
was denied, and the SEC did not appeal the decision to the U.S Supreme Court and
the  SEC's  case was  dismissed  with  prejudice  in 1997.  In early  1999,  the
California  Department of Securities  issued a cease and desist order against us
based  on  similar  assertions.   However,  at  our  challenge,  the  order  was
immediately  lifted and we  continue to  facilitate  viatical  settlements  with
purchasers residing in California.

        Five states - Iowa,  Maine,  North and South  Dakota and Virginia - have
amended their securities laws to define viatical settlements as securities. Some
other  states  have  asserted  that  viatical  settlements  are  securities  and
announced their intention to regulate the offer and sale viatical settlements.

        We believe  that a  combination  of  consumer  protection-type  laws and
existing insurance  regulations provide an appropriate  framework for regulation
of the industry.  The  wide-spread  application of securities  laws would,  as a
practical  matter,  prevent  us and other  viatical  settlement  companies  from
marketing  settlements with little or no benefit to purchasers.  Currently,  the
vast majority of purchasers are  sophisticated  individuals who have little need
for the protections afforded by the securities laws. At this point, the possible
application of such laws has not had an adverse, material effect on our business
nor do we expect  any such  adverse  impact in the future  primarily  due to our
redirected emphasis on the senior life settlement market.

        Insurance  Regulation.  As a senior  life  settlement  company  and as a
viatical  settlement  company,  we facilitate  the transfer of ownership in life
insurance policies,  but do not participate in the issuance of policies.  We are
not  required  to  be  licensed  as  an   insurance   company  or  an  insurance
professional. We do, however, deal with insurance companies and professionals in
our business and are indirectly  affected by the regulations  covering them. The
insurance  industry  is highly  regulated,  and these  regulations  affect us in
numerous ways. We must  understand the regulations as they apply to policy terms
and provisions and the entitlement to, and  collectibility  of, policy benefits.
We rely upon the protections  against  fraudulent conduct that these regulations
offer and we rely upon the licensing of companies and  individuals  with whom we
do business.

        Taxation.  In 1996, Congress passed the Health Insurance Portability and
Accountability  Act.  This act  exempts  from  taxation  proceeds  received in a
viatical  settlement  paid  to  terminally  ill  viators  (those  having  a life
expectancy  of 24 months or less) and  chronically  ill  viators  (those who are
incapable of at least two daily-living  activities,  such as eating and bathing,
and  require  supervision).  The tax  exemption  applies  only  if the  viatical
settlement  company is licensed in the state in which the viator resides,  or if
the viator resides in a state that does not license viatical  companies,  if the
viatical  company can certify  that it complies  with the model act  provisions.
Because we are licensed in Texas, we believe that,  under 1996 act, viators will
not be  subject  to  federal  income  tax  from  viatical  settlements  which we
facilitate.  Since most states follow the Federal  income tax  definitions,  the
receipt of settlement proceeds is generally exempt for state income tax purposes
also.

        The act does not exempt the receipt of senior life settlement  proceeds.
Senior life settlement proceeds would typically be taxed as capital gains to the
extent  that the  proceeds  exceed  the cash  surrender  value of the  insurance
policy.  If the cash surrender value exceeds the total premiums paid, the excess

                                       8
<PAGE>

is taxed as ordinary  income.  In many  instances,  the total premiums paid will
exceed the settlement amount,  allowing the seller to realize a capital loss for
the difference.

Employees

        As of February 29, 2000,  we had 26 direct  employees,  none of whom are
represented  by a  labor  union,  as well as  over  1,000  licensees  who act as
independent  contractors.  We continuously  review benefits and other matters of
interest  to  its   employees   and  consider  our  employee   relations  to  be
satisfactory.

More about Life Partners

        Life  Partners is the  successor  name to IGE,  Inc.,  a publicly  held,
Massachusetts  corporation  that was formed in 1971,  but had been  dormant  and
without  operations since 1985. On January 21, 2000, IGE, Inc. acquired LPI in a
share exchange and its name was then changed to Life Partners.  Prior to January
21,  2000,  we were a  privately-held  corporation.  Our  executive  offices are
located  at  6614  Sanger,  Waco,  Texas  76710  and  our  telephone  number  is
254-751-9700. Our websites are www.lifepartnersinc.com,  www.lpi-investments.com
                               -----------------------   -----------------------
and www.lphiseniorsettlements.com
---------------------------------

RISK FACTORS

        Please remember to be cautious in reading forward-looking statements.

Important Factors regarding Forward-Looking Statements.

        IN ADDITION TO OTHER  INFORMATION  IN THIS ANNUAL  REPORT ON FORM 10-KSB
AND IN THE  DOCUMENTS WE ARE  INCORPORATING  BY REFERENCE,  THE  FOLLOWING  RISK
FACTORS  SHOULD BE CAREFULLY  CONSIDERED  IN  EVALUATING  LIFE  PARTNERS AND OUR
BUSINESS BECAUSE SUCH FACTORS CURRENTLY HAVE A SIGNIFICANT  IMPACT OR MAY HAVE A
SIGNIFICANT  IMPACT ON OUR BUSINESS,  OPERATING RESULTS OR FINANCIAL  CONDITION.
THIS ANNUAL REPORT ON FORM 10-KSB CONTAINS FORWARD-LOOKING  STATEMENTS THAT HAVE
BEEN MADE PURSUANT TO THE PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995.  ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING  STATEMENTS  AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND
ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-KSB.

We Are Operating in Markets That May Change Dramatically

        We are operating in the viatical and senior life settlement markets. The
viatical  settlement  market is just over a decade  old.  While the  market  saw
tremendous  growth in its initial  years,  the market growth in recent years has
moderated and future market growth we consider to be flat.

        The senior  life  settlement  market is less than three years old and is
just now beginning to rapidly expand.  How and to what extent it will develop is
uncertain.  While the potential  market is estimated at over $100  billion,  our
ability to originate, underwrite and place senior life settlements has yet to be
tested in large numbers.  The development of the senior life  settlement  market
will depend heavily upon the entry of institutional  purchasers.  Whether we can
attract  institutional  purchasers  will depend on our ability to convince these
purchasers  that we can  originate  sufficient  numbers of sellers  and that our
pricing  practices  are  sound.  The market  may also  depend on the  ability of
purchasers to insure against  "extended  life" risks (the risk that sellers will
live longer than  predicted).  The ability to insure against extended life risks
is still undeveloped at this time.

                                       9
<PAGE>

        While we are among the most  experienced  and largest  companies  within
these markets, our prospects must be considered in light of the risks,  expenses
and difficulties  encountered by those attempting to operate in rapidly evolving
markets. We cannot assure you that we will be successful in addressing the risks
we face.  The  failure  to do so could  have a  material  adverse  effect on our
business, financial condition and results of operations.

Our Operating  Results in One or More Future Periods Are Likely To Fluctuate and
May Fail To Meet Expectations.

        Our operating results in the viatical market have fluctuated in the past
and may fluctuate  significantly in the future depending on purchaser demand for
viatical settlements. Our operating results in the senior life settlement market
may fluctuate significantly depending on our ability to develop this new market.
As a result of these or other factors, our operating results may, in some future
period, fall below market  expectations.  In such event, the market price of our
securities might fall. Moreover,  fluctuations in our viatical operating results
may also result in volatility in the market price of our securities.

Our Success Depends on Maintaining Relationships Within Our Referral Networks

        In the  viatical  market,  we  rely  primarily  upon  brokers  to  refer
potential viators to us and upon financial planners to refer viatical purchasers
to us. These  relationships are essential to our operations and we must maintain
these  relationships  to  be  successful.  We  do  not  have  fixed  contractual
arrangements  with the  brokers or  financial  planners  and they are free to do
business with our  competitors.  In addition,  the pool of viatical  brokers and
referring  financial  planners  is  relatively  small,  which can  increase  our
reliance on our existing relationships.

        In the senior life market, we rely primarily on insurance  professionals
to refer potential sellers to us. These  professional are typically  compensated
by us upon closing. Our ability to maintain these relationships will depend upon
our  closing  rates  and  the  level  of  compensation  we pay to the  referring
professional.  The compensation  paid to the referring  professional will affect
the offer price to the seller and the  compensation we receive.  We must balance
these interests  successfully to build our referring  network and attain greater
profitability.

Our  Success in  the Senior Life  Settlement  Market  Depends  on  Institutional
Sources of Capital

        We  entered  the  senior  life  market at its  inception  in 1997  under
contract for ELSI. On behalf of ELSI,  we  originated,  reviewed and  underwrote
almost  $600  million  in face  value of senior  life  settlements  in 1997.  In
underwriting  these policies,  we quantified  premium and life expectancy risks,
but did not purchase any of the policies for our own account or assumed any risk
associated therewith.

        In May 2000,  we  announced an agreement  with the  representative  of a
large  financial   institution,   which  gives  the  institution,   through  its
representative,  a five-day,  right of first  refusal to examine and acquire the
senior life settlements we originate.  The agreement provides for a volume of up
to $1.0 billion of policy face amount per calendar quarter. While this agreement
is  significant  to our expansion into the senior life  settlements  market,  it
carries  certain risks for us. The  institution  is not required to purchase any
senior life settlements from us. To the extent the institution does not purchase
senior life  settlements  we originate,  our  development of this market will be
slowed and our financial results could be adversely affected.

We Must Expand Our Senior Life Referral Network

        An  impediment  to our  expansion in the senior life  settlement  market
could be the  difficulty  in  identifying  a large volume of potential  sellers.

                                       10
<PAGE>

These  sellers  are  typically  affluent  persons  over  the  age of 70 and  not
terminally  or  chronically  ill.  The target  market is  relatively  narrow and
advertising  methods such as direct mailings or print media  advertising are not
likely to be  cost-effective.  We believe  the best way to reach this  market is
generally through life insurance  professionals and, to a lesser extent, through
professionals  engaged in estate  planning,  such as attorneys,  accountants and
financial planners. Our business plan focuses on insurance  professionals and we
intend to rapidly  expand our referring  network of insurance  professionals  to
build our senior  life  market.  We are  expanding  our network  through  direct
solicitation,  calls to managing general insurance agents,  and by word-of-mouth
contacts.  To a lesser extent,  we are also using advertising in estate planning
trade  publications and our internet website.  This is a new market and building
our  referral   network  will  depend  on  our  ability  to  educate   insurance
professionals about the benefits of senior life settlements to potential sellers
and to the professionals themselves. While we believe we have been successful in
publicizing the benefits of viatical settlements,  we cannot assure you that our
past  successes  will carry over into this new market.  Our business,  financial
condition and results of operations  could be materially  adversely  affected to
the extent we fail to expand the referral network.

We Depend on Growth in the Senior Life Settlement Market

        We believe the  viatical  market is firm and will  provide a stable base
for our  operations.  Our growth,  however,  will depend on growth in the senior
life settlement  market. The senior life market is new and its growth uncertain.
The senior life market may fail to grow due to a variety of factors, including:

        o   the inability to locate sufficient numbers of senior life sellers;

        o   the  inability to  convince  potential sellers  of  the  benefits of
            senior life settlements;

        o   the inability to attract institutional purchasers;

        o   the  failure  to  develop   adequate   financial   risk   management
            mechanisms, such as reinsurance or hedging arrangements, to mitigate
            "life extension" risks,

        o   competition  from  life  insurance  companies   offering  comparable
            products;

        o   the  occurrence of illegal or abusive business  practices  resulting
            in negative publicity about the market; and

        o   the adoption of burdensome governmental regulation.

        In  addition,  the  senior  life  market  may evolve in ways we have not
anticipated  and we may be  unable  to  respond  in a timely  or  cost-effective
manner.  If the senior life market fails to grow, or fails to grow as quickly as
we have anticipated, our business, financial condition and results of operations
would be materially adversely affected.

Our Purchasers Depend  on Our Abilities To Predict Life Expectancies;  If We Are
Not Accurate, We Will Lose Purchasers;  We Must Purchase in Large Numbers

        A purchaser's  investment  return from a senior life settlement  depends
primarily  on the  demise  of the  insured.  We price  settlements  based on the
anticipated life expectancy of an insured. Life expectancies are determined from
actuarial  data  based  on the  historical  experiences  of  similarly  situated
persons.  The data is necessarily based on averages  involving the laws of large
numbers  and it is  impossible  to predict  any one  insured's  life  expectancy
exactly.  To mitigate the risk that an insured will outlive his or her predicted
life  expectancy,  purchasers  must  have  the  potential  to  buy  senior  life
settlements in large numbers.

                                       11
<PAGE>

        If we underestimate the average life  expectancies,  our purchasers will
not realize the returns  they seek and will invest  their funds  elsewhere.  Our
ability to  accurately  predict  life  expectancies  is  affected by a number of
factors,  including:

        o  the accuracy of our actuarial and other  historical data,  which must
           sufficiently account for factors including an insured's age,  medical
           condition, life habits (such as smoking), and geographic location;

        o  our ability to anticipate and adjust for trends,  such as advances in
           medical treatments, that affect life expectancy data; and

        o  our ability to balance competing interests when pricing  settlements,
           such as the  amounts  paid to viators  or senior  life  sellers,  the
           acquisition  costs paid by purchasers,  and the compensation  paid to
           ourselves and our referral networks.

        To foster the integrity of our pricing systems, we use both in-house and
outside experts, including a medical doctor and an actuary. We cannot assure you
that,  despite  our  experience  in  settlement  pricing,  we  will  not  err in
underestimating average life expectancies. If we do so, we could lose purchasers
and the loss of purchasers could have a material adverse effect on our business,
financial condition and results of operations.

The Senior Life Settlement Market  Could Become Extremely Competitive and We May
Not Be Able To Compete Effectively In The Future

        We face limited competition in the senior life settlement market at this
time. One of our competitors,  Viaticus, is a subsidiary of CNA Financial Corp.,
one of the  nation's  largest  insurance  companies.  As a  subsidiary  of  CNA,
Viaticus has internal  sources of funding for the  purchase of  settlements  and
market  development,  and access to the CNA network of insurance  professionals.
Our ability to compete  successfully  in the market  will depend  greatly on our
abilities to build our referral  network and to secure a low cost of funds. As a
result,  present and future  competitors may be able to develop and expand their
referral networks quickly,  secure lower cost funding sources, or may be able to
take advantage of other opportunities more readily than we can. If we are unable
to  compete  successfully  in the senior  life  settlement  market,  we will not
realize the growth we expect from this market.

Government Regulation Could Negatively Impact Our Business

        We are licensed in the State of Texas as a viatical  settlement  company
and, when proposed Texas  regulations are adopted,  will be licensed as a senior
life settlement  company.  The Texas licensing laws and regulations are based in
part on a model law and regulations  promulgated by the National  Association of
Insurance Commissioners.  At least 28 other states have now adopted some version
of this model law or another form of regulation  governing  viatical  settlement
companies in some way.  These laws  generally  require the licensing of viatical
providers and brokers,  requires the filing and approval of viatical  settlement
agreements and disclosure  statements,  and describes the content of disclosures
that must be made to potential  viators,  describes  various periodic  reporting
requirements for viatical  settlement  companies and prohibits  certain business
practices deemed to be abusive.  The Federal Securities and Exchange  Commission
and certain  states have also  attempted to regulate  the  industry  through the
application  of Federal and state  securities  laws. In a suit filed against us,
the SEC's attempts to apply the securities  laws were rebuffed by the U.S. Court
of Appeals for the District of Columbia,  which ruled that our transactions were
not securities under the Federal  securities laws. Based on this ruling, the SEC
has discontinued  any further  attempts to apply the Federal  securities laws to

                                       12
<PAGE>

viatical  settlements  as  transacted  by us. The Court of Appeals  decision was
based on federal law and, while  persuasive  authority,  is not binding upon the
states.  Several states have indicated that they may apply their securities laws
to include viatical settlements. To our knowledge, no state has yet attempted to
apply its securities laws to senior life  settlements,  but such  application is
possible and could occur in the future.  While we welcome reasonable  regulation
of the viatical and senior life  markets and believe that such  regulation  will
benefit  these  markets,  state  attempts  to  regulate  these  markets  through
application of their securities laws may adversely affect the markets. We cannot
assure you that we will not  encounter  regulatory  difficulties  in the future,
some of which could have a material adverse effect on our business. In addition,
government   regulation  could  affect  our  referral   networks  or  settlement
purchasers, which could in turn have a material adverse effect on our business.

We Depend upon Certain Key People

        Our  success  depends  to  a  significant   degree  upon  the  continued
contributions of Mr. Brian D. Pardo,  our Chairman and Chief Executive  Officer.
Mr. Pardo founded Life Partners and has guided its development.  His involvement
in the viatical  market has greatly  influenced the  development of that market.
The loss of his services could have a material  adverse effect on us. We have no
employment  agreement  with Mr. Pardo,  and we have no key man life insurance on
him. Our success will also depend on the other members of our senior  management
team and our technical and marketing  personnel.  The loss of key personnel,  or
the inability to attract additional,  qualified personnel, could have a material
adverse effect upon our results of operations,  our ability to price  settlement
offers accurately and our ability to expand our referral network.

Our Chairman  and  Chief Executive  Officer  Beneficially Owns 83% of Our Common
Stock and, as a Result, Can Exercise Significant Influence Over Our Company

        Mr.  Brian  D.  Pardo,   our  Chairman  and  Chief  Executive   Officer,
beneficially  owns  approximately  83% of  our common stock.  He will be able to
control most  matters  requiring  approval by our  stockholders,  including  the
election of directors and approval of significant corporate  transactions.  This
concentration  of ownership may also have the effect of delaying or preventing a
change in control of Life Partners,  which in turn could have a material adverse
effect on the market price of our common stock or prevent our stockholders  from
realizing  a premium  over the market  price for their  shares of common  stock.

Our Stock Is Currently Thinly Traded and the Stock Price May Be Volatile

        Our common stock is traded on the Nasdaq OTC Bulletin Board,  which is a
quotation service facilitating trades in over-the-counter equity securities. The
OTC Bulletin  Board is generally  the market for any security that is not listed
or traded on Nasdaq or a national  securities  exchange.  The OTC Bulletin Board
does not provide the same  qualitative  standards  available  with Nasdaq or the
national securities exchanges,  order execution is manually processed,  and as a
result the trading and pricing of these securities is not as efficient as Nasdaq
or the national  securities  exchanges.  Our share price during the last 90 days
has generally been over $20 per share, giving us a market capitalization of over
$200 million. Our total share volume for April 2000 was less than 16,000 shares.
The trading volumes are thin, therefore the market presently offers shareholders
little or no apparent liquidity.

        Our share prices may be volatile due to actual or anticipated variations
in our quarterly operating results, positive or negative developments within the
industry  or  the  general  economy,  and  positive  or  negative  announcements
regarding material  developments in our business.  We cannot assure you that the
market for our shares will be  sufficient  to permit you to sell our shares when
you want at the prices you want.

                                       13
<PAGE>

Item 2.  Description of Properties

        Our corporate offices are located at 6614 Sanger Ave., Waco, Texas where
we have been located for almost ten years. We have a two-year lease agreement on
the  property at 6614 Sanger Ave.  that  expires on December  31,  2000.  We pay
$9,835 per month for the lease on the 13,844 square feet office building.

        We have contracted to purchase an existing office  building,  located at
204 Woodhew in Waco,  Texas,  to house our new  corporate  offices.  A tentative
closing date has been set for June 15, 2000. The contract is for the purchase of
1.068  acres  with a 12,012  square  foot  office  building  built in 1986.  The
contracted  price for the land and  improvements is $800,000.  The financing for
the  property  has  been  approved  by Bank of  America.  The  terms of the loan
provides for a loan to value ratio of 80% at a 9.25% fixed  interest rate with a
full amortization period of 15 years.

Item 3.  Legal Proceedings

        We  are  engaged  from  time  to  time  in  various  legal  actions  and
administrative  proceedings  incident to the nature of our business.  We believe
that  none  of the  litigation  or  proceedings  will  have a  material  effect,
individually  or in the aggregate,  on our  consolidated  financial  position or
results of operations.

Item 4.  Submission of Matters To a Vote of Security Holders

        On January 19, 2000 the Share Exchange Plan by which IGE, Inc.  acquired
Life Partners, Inc. was submitted to  and approved by the  shareholders  of IGE,
Inc. At that meeting,  9,948,324 shares voted in favor of the share exchange and
100 shares abstained.  There were no votes against the proposed share exchange.

                                     PART II

Item 5.  Market for Our Common Stock and Related Stockholder Matters

        Market  Information.  On May 18,  2000,  there  were  approximately  700
shareholders  of  record  of  our  Common  Stock.  We  believe  that  there  are
approximately  2,500 beneficial owners of shares of our common stock who hold in
street name through brokers. After our share exchange transaction on January 21,
2000, with our predecessor,  I.G.E., Inc., our common stock began trading on the
Nasdaq OTC Bulletin  Board under the symbol  "LPHI".  Prior to January 21, 2000,
the I.G.E.  common stock was listed on the Nasdaq OTC  Bulletin  Board under the

                                       14

symbol "IGEE". I.G.E. was a "blank check" company with no operating business and
no income from  operations.  Prior to January 21, 2000, the I.G.E.  common stock
traded,  if at all, at nominal  volumes and  values,  and we have not  presented
market  information  for the prior periods  believing  such  information  is not
meaningful.

        The  following  table sets forth the high and low closing bid prices per
share of our common  stock for each full  quarterly  period  during the two most
recent fiscal years as reported by the Nasdaq OTC Bulletin Board. Bid prices for
the Nasdaq OTC Bulletin Board reflect inter-dealer prices, do not include retail
mark-ups,  mark-downs and  commissions,  and do not  necessarily  reflect actual
transactions.
<TABLE>
<CAPTION>

                                           Fiscal Year Ended
                                           February 29, 2000
                                     ------------------------------
                                         High             Low
                                     --------------  --------------
<S>                                    <C>                 <C>
        Fourth quarter (from           $32.00              $0
        January 21, 2000)
</TABLE>

        On May 18, 2000, the last reported sale price of our common stock on the
Nasdaq OTC Bulletin Board was $25 per share.

        Dividends.  The Company has never  declared a cash dividend with respect
to its  Common  Stock and  intends to retain  future  earnings  to  support  the
Company's growth. There are no contractual restrictions on the Company's present
or future ability to pay  dividends.  Future  dividend  policy is subject to the
discretion of the Board of Directors and is dependent  upon a number of factors,
including future earnings,  capital  requirements and the financial condition of
the Company.

Item 6.  Management's Discussion and Analysis or plan of Operation

        Special Note:  Certain  statements  set forth below  under this  caption
constitute  "forward-looking statements"  within  the meaning of the Reform Act.
See "Special Note Regarding  Forward-Looking  Statements" for additional factors
relating to such statements.

        The following discussion and analysis should be read in conjunction with
the Company's  Consolidated  Financial  Statements  and Notes thereto  appearing
elsewhere in this Report.

Comparison Of Years Ended February 29, 2000 And February 28, 1999

        The Company  reported net income of $103,020 for the year ended February
29,  2000,  as compared to net income of $2,752 for the year ended  February 28,
1999.  This  increase in net income is  attributable  primarily to the following
factors:  (1) a 15% increase in the average  revenues per  settlement,  (2) a 6%
decrease  in  general  and  administrative  costs  offset  in  part by (3) a 26%
decrease the number of cases settled.

        Revenues - Revenues  decreased  by  $918,301  or 15% in 2000 as compared
with 1999.  This  decrease was due primarily due to a 26% decrease in the number
of  settlements  offset in part by a 15%  increase  in the  average  revenue per
settlement  from $31,774 in 1999 to $36,401 in 2000.  The decrease in the number
of settlements was due to management's efforts to be more selective in the cases
it selected for settlement.

        Brokerage   Fees  -  Brokerage  fees  decreased  43%  or  $983,830  from
$3,753,643 in 1999 to $2,769,813 in 2000. This decrease is due to a 26% decrease
in the number of settlements. Brokerage fees per settlement remained constant at
$20,073 during the two years ended February 29, 2000

        General  and  Administrative   Expenses  -  General  and  Administrative
expenses  decreased by 6% or $129,164  from  $2,311,122 in 1999 to $2,181,958 in
2000.  This decrease was due in primarily to  reductions  in the medical  review
costs   combined  with   management's   efforts  to  reduce  other  general  and
administrative costs.

                                       15
<PAGE>

        Interest and Other Income - Interest and other income  decreased  24% or
$41,099  from  $171,825  in 1999 to  $130,726  in 2000.  This  decrease  was due
primarily to a reduction in the time funds are held in escrow by Sterling  Trust
prior to their being disbursed.

        Interest  Expense -  Interest  Expense  decrease  by 38% or $6,983  from
$18,375 in 1999 to $11,392 in 2000.  This  decrease was due to the  repayment of
the Company's interest bearing debt in 2000.

        Income  Taxes - Income tax expense  increased  by $60,260 from $1,620 in
1999 to $61,880 in 2000. This increase is  proportionate  to the increase in net
income before income taxes in 2000 as compared to 1999.

Liquidity And Capital Resources

        Operating Activities

        Net cash flows used in  operating  activities  for the fiscal year ended
February 29, 2000 was $15,838 compared with net cash flows provided by operating
activities of $56,954 for the fiscal year ended February 28, 1999. This decrease
in cash  flows from  operating  activities  was  attributable  primarily  to the
following factors:  (1) a reduction in accrued liabilities of $456,809 offset in
part by (2) net income of $103,020 and (2) a decrease in accounts  receivable of
$188,242.

        The  Company's  strategy  is  to  increase  cash  flows  generated  from
operations by increasing  revenues while  controlling  brokerage and general and
administrative expenses.

Capital Requirements And Resources

        At  February  29,  2000 the  Company  had a working  capital  deficit of
$115,156.  Management  anticipates  that continued  profitable  operations  will
result in an improved working capital position.  Management believes that it can
achieve sufficient working capital though operations and will not need to borrow
funds or obtain additional capital contributions to achieve this goal.

        The  Company  anticipates  acquiring  land and an  office  building  for
$800,000.  It has obtained a commitment from Bank of America to finance $640,000
of this  acquisition  with the balance of $160,000  coming from  operating  cash
flows.

ITEM 7.  Financial Statements and Supplementary Data

        The Company's audited financial statements,  together with the report of
auditors, are included in the report after the signature page.

Item 8.  Changes  In  and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

        Not applicable.


                                    PART III

Item 9.  Directors,  Executive   Officers,   Promoters  and   Control   Persons;
Compliance With Section 16(a) of the Exchange Act

        The information required in response to this Item is incorporated herein
by reference to the Company's  proxy  statement to be filed with the  Securities
and  Exchange  Commission  pursuant to  Regulation  14A, not later than 120 days
after the end of the fiscal year covered by this report.

                                       16
<PAGE>

Item 10.  Executive Compensation

        The information required in response to this Item is incorporated herein
by reference to the Company's  proxy  statement to be filed with the  Securities
and  Exchange  Commission  pursuant to  Regulation  14A, not later than 120 days
after the end of the fiscal year covered by this report.

Item 11.  Security Ownership Of Certain Beneficial Owners And Management

        The information required in response to this Item is incorporated herein
by reference to the Company's  proxy  statement to be filed with the  Securities
and  Exchange  Commission  pursuant to  Regulation  14A, not later than 120 days
after the end of the fiscal year covered by this report.

Item 12.  Certain Relationships And Related Transactions

        The information required in response to this Item is incorporated herein
by reference to the Company's  proxy  statement to be filed with the  Securities
and  Exchange  Commission  pursuant to  Regulation  14A, not later than 120 days
after the end of the fiscal year covered by this report.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

        Exhibit No. 10.2 is  a  management  contract  or  compensatory  plans or
        arrangements.

                                  EXHIBIT INDEX
                             DESCRIPTION OF EXHIBIT

         Number                    Description
         ------                    -----------
           2.1      Share  Exchange  agreement  between  I.G.E., Inc.  and  Life
                    Partners, Inc. dated January 18, 2000
           3.1      Articles of Organization, dated May 20, 1971
           3.1(a)   Articles of Amendment, Dated January 20, 2000
           3.2      Bylaws
          10.1      LPHI Omnibus Equity Compensation Plan
          21        Subsidiaries of the Issuer
          27.1      Financial Data Schedule

(b) Reports on Form 8-K:

        We filed the following  Form 8-K's during the quarter ended February 29,
2000:
1.         A Form 8-K dated January 21, 2000, reporting a share exchange between
           Life Partners,  Inc. and I.G.E., Inc., effective January 19, 2000, in
           which Life Partners  became a wholly-owned  subsidiary of I.G.E.  and
           I.G.E. changed its name to Life Partners Holdings, Inc. (the Issuer).

                                       17
<PAGE>


                                   SIGNATURES

        In  accordance  with  Section  13 or  15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

May 30, 2000                            Life Partners Holdings, Inc.

                                        By:  /s/ Brian D. Pardo
                                             -----------------------------------
                                             Brian D. Pardo
                                             President and Chief Executive
                                               Officer


        In  accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.



       Name                          Title                         Date


/s/ Brian D. Pardo              President, Principal          May 30, 2000
------------------------
                                Executive Officer, and
                                Director


/s/ Jacquelyn Davis             Treasurer                     May 30, 2000
------------------------




/s/ R. Scott Peden              Corporate Clerk               May 30, 2000
------------------------
                                (Secretary), Director




<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.


                        CONSOLIDATED FINANCIAL STATEMENTS


                          YEARS ENDED FEBRUARY 29, 2000
                              AND FEBRUARY 28, 1999


<PAGE>






                                   TABLE OF CONTENTS




INDEPENDENT AUDITORS' REPORT
   ON FINANCIAL STATEMENTS....................................................1

FINANCIAL STATEMENTS

   Consolidated Balance Sheet...............................................2-3

   Consolidated Statements of Income..........................................4

   Consolidated Statements of Stockholders' Deficit.........................5-6

   Consolidated Statements of Cash Flows......................................7

   Notes to Consolidated Financial Statements..............................8-12





<PAGE>










                             Independent Auditors' Report
                             ----------------------------


To the Board of Directors
Life Partners Holdings, Inc.

We have audited the  accompanying  consolidated  balance  sheet of LIFE PARTNERS
HOLDINGS,  INC. as of February 29, 2000, and the related consolidated statements
of income,  stockholders'  deficit,  and cash flows for the years ended February
29,  2000  and  February  28,  1999.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Life Partners Holdings, Inc. as
of February 29, 2000,  and the results of its  operations and its cash flows for
the years ended  February 29, 2000 and February 28,  1999,  in  conformity  with
generally accepted accounting principles.



/s/Gray & Northcutt, Inc.
April 26, 2000

                                      -1-
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET
                               FEBRUARY 29, 2000
                                  PAGE 1 of 2


                                     ASSETS

<TABLE>
<S>                                                                    <C>
Cash                                                                  115,775
Accounts receivable due from employees                                 17,233
Current portion - long-term notes receivable                            3,419
Prepaid expenses                                                        5,167
                                                                  ------------
     Total current assets                                             141,594
                                                                  ------------

Machinery and equipment                                                39,460
Transportation equipment                                              173,775
                                                                  ------------
                                                                      213,235
Accumulated depreciation                                             (119,076)
                                                                  ------------
                                                                       94,159
                                                                  ------------


Notes receivable, net of current portion, shown above,
     and allowance for bad debt of $40,798                             15,631
Other                                                                   7,429
                                                                  ------------
                                                                       23,060
                                                                  ------------

                                                                      258,813
                                                                  ============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      -2-
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET
                               FEBRUARY 29, 2000
                                   PAGE 2 of 2


                     LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>

Current Liabilities:
<S>                                                                <C>
  Accounts payable                                                     67,385
  Due to related party                                                 12,861
  Income tax payable                                                   63,500
  Accrued liabilities                                                 113,004
                                                                  ------------
        Total current liabilities                                     256,750
                                                                  ------------
Contingencies                                                               -
                                                                  ------------

Stockholders' Deficit:

  Common stock, $0.01 par value, 10,000,000 shares
     authorized; 10,000,000 shares issued and
     outstanding                                                      100,000
  Additional paid-in capital                                        4,705,817
  Accumulated deficit                                              (4,803,754)
  Less:  Treasury stock - 1,842,228 shares                                  -
                                                                  ------------
        Total Stockholders' Deficit                                     2,063
                                                                  ------------

        Total Liabilities and Stockholders' Deficit                   258,813
                                                                  ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      -3-
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
          FOR THE YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999


<TABLE>
<CAPTION>

                                                      2000              1999
                                                  ------------      ------------

<S>                                               <C>               <C>
REVENUES                                          $ 5,023,389       $ 5,941,690

BROKERAGE FEES                                      2,769,813         3,753,643
                                                  ------------      ------------

REVENUES, NET OF BROKERAGE FEES                     2,253,576         2,188,047
                                                  ------------      ------------

OPERATING AND ADMINISTRATIVE EXPENSES:
     General and administrative                     2,181,958         2,311,122
     Depreciation                                      26,052            26,003
                                                  ------------      ------------

                                                    2,208,010         2,337,125
                                                  ------------      ------------

INCOME (LOSS) FROM OPERATIONS                          45,566          (149,078)
                                                  ------------      ------------

OTHER INCOME (EXPENSES):
     Interest and other income                        130,726           171,825
     Interest expense                                 (11,392)          (18,375)
                                                  -------------     ------------

                                                      119,334           153,450
                                                  -------------     ------------

INCOME BEFORE INCOME TAXES                            164,900             4,372
                                                  -------------     ------------

INCOME TAXES
     Current tax expense                               61,880             1,620
                                                  -------------     ------------

                                                       61,880             1,620
                                                  -------------     ------------

NET INCOME                                        $   103,020       $     2,752
                                                  =============     ============

PER SHARE EARNINGS OF
     COMMON STOCK AMOUNTS                         $       .01       $       .00
                                                  =============     ============
AVERAGE COMMON AND COMMON
     EQUIVALENT SHARES OUTSTANDING                  9,938,033         9,930,000
                                                  =============     ============
</TABLE>




   The accompanying notes are an integral part of these financial statements.

                                      -4-
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
                                  PAGE 1 OF 2

<TABLE>
<CAPTION>
                                                        2000            1999
                                                    ------------     ----------

Cash Flows from Operating Activities:
<S>                                                     <C>               <C>
  Net income                                            103,020           2752
  Adjustments to reconcile net
     income to net cash provided by
     (used in) operating activities -
        Depreciation                                     26,052         26,003
        Consulting fees paid with treasury stock          2,500              -
        (Increase) Decrease in
           accounts receivable                          188,242         86,181
        (Increase) Decrease in prepaid insurance         (1,149)           701
        (Increase) Decrease in other assets                 424         (2,351)
        Increase (Decrease) in accounts payable          60,002        (16,793)
        Increase (Decrease) in income taxes payable      61,880        (19,355)
        (Decrease) in accrued liabilities              (456,809)       (20,184)
                                                      ----------     ----------

     Net cash provided by (used in)
        operating activities                            (15,838)        56,954
                                                      ----------     ----------

Cash Flows from Investing Activities:
  Purchases of property and equipment                   (15,331)       (14,293)
                                                      ----------     ----------

     Net cash used in investing activities              (15,331)       (14,293)
                                                      ----------     ----------

Cash Flows from Financing Activities:
  Payments on notes payable                             (24,207)       (15,130)
                                                      ----------     ----------

     Net cash used in financing activities              (24,207)       (15,130)
                                                      ----------     ----------

Net Increase (Decrease) in Cash and Cash Equivalent     (55,376)        27,531

Cash and Cash Equivalents,
Beginning of Year                                       171,151        143,620
                                                      ----------     ----------

Cash and Cash Equivalents,
End of Year                                             115,775        171,151
                                                      ==========     ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -5-
<PAGE>


                          LIFE PARTNERS HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
                                  PAGE 2 OF 2
<TABLE>
<CAPTION>
                                                        2000            1999
                                                    ------------     ----------

Supplemental Disclosures of Cash Flow Information:
<S>                                                      <C>            <C>
  Interest, net of capitalized amounts                   11,392         18,375
                                                    ============     ==========

  Income taxes                                                0              0
                                                    ============     ==========

</TABLE>

Supplemental Disclosure of Non-Cash Transactions:
  During November 1999, LPI converted a note
  payable due to a corporation of $350,000 and
  the related accrued interest totaling $52,063
  to 70,000 shares of common stock, resulting in
  additional paid-in capital of $401,363.

During  January 2000,  the Company  sold 907,772 shares  of  treasury stock  for
  $9,078 in notes receivable.  Also, in January 2000,  the Company gave  250,000
  shares of treasury stock to consultatnts for services rended. This transaction
  was valued at $2,500 for financial reporting purposes.









   The accompanying notes are an integral part of these financial statements.

                                      -6-

<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
          FOR THE YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999

<TABLE>
<CAPTION>

                                              Common Stock
                                       -----------------------------
                                          Number        $0.010       Additional                        Total
                                            of            par          Paid-In      Accumulated    Stockholders'
                                          Shares       Value (1)     Capital (1)      Deficit         Equity
                                       -------------------------------------------------------------------------

Balanace, February 28, 1998
<S>                                      <C>           <C>           <C>           <C>                <C>
  as previously reported                 9,948,324     $ 99,483      $4,213,168    $(4,381,540)       (68,889)

Adjustment for reverse stock split      (9,448,324)     (94,483)         94,483              -              -

Adjustment in connection with
  reverse merger                         9,430,000       94,300         (14,775)      (527,986)      (448,461)
                                       -------------------------------------------------------------------------

Balance, February 28, 1998               9,930,000       99,300       4,292,876     (4,909,526)      (517,350)

Net income for the
  year ended
  February 28, 1999                              -            -               -          2,752          2,752
                                       -------------------------------------------------------------------------

Balance, February 28, 1999               9,930,000       99,300       4,292,876     (4,906,774)      (514,598)

Common stock issued
  for note payable                          70,000          700         401,363              -        402,063

Proceeds from the sale of
  treasury stock                                 -            -          11,578              -         11,578

Net income for
  year ended
  February 29, 2000                              -            -               -        103,020        103,020
                                       -------------------------------------------------------------------------

Balance, February 29, 2000              10,000,000      100,000       4,705,817     (4,803,754)         2,063
                                       =========================================================================

</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      -7-
<PAGE>


                          LIFE PARTNERS HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000




(1)   DESCRIPTION OF BUSINESS

      Life Partners  Holdings,  Inc.  (the  "Company")  formerly  IGE,  Inc. was
      organized under the laws of the Commonwealth of Massachusetts in 1971, but
      had been dormant and without  operations since 1985.  On January 18, 2000,
      the shareholders of Life Partners Holdings,  Inc. and Life Partners,  Inc.
      (LPI) entered into a share exchange agreement whereby LPI became a wholly-
      owned operating subsidiary  of  the  Company.  The acquisition was treated
      as a pooling of interest for financial reporting purposes (See  Note 4 for
      further details.)  On  January 20, 2000,  the Company  acquired all of the
      outstanding stock of Extended Life Services, Inc.  for $500.   (See Note 4
      for further details).

      The Company's subsidiaries are as follows:

         LPI  is  a  viatical   settlement  company   established  in  1991  and
         incorporated in the State of Texas for the purpose of assisting persons
         in  facilitating  the  purchase  of  the  life  insurance  policies  of
         terminally ill persons at a discount to their face value.

         Extended Life Services,  Inc. was established in 1998 and  incorporated
         in the State of Texas to engage in senior life settlement  transactions
         by  assisting  elderly  individuals  to  reallocate  their  assets from
         insurance  policies  into  assets  used for  long-term  care  coverage,
         annuities, investments, etc.

(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The following is a summary of significant  accounting policies followed by
      the Company:

         Cash  and  Cash  Equivalents  -  For purposes  of the statement of cash
         flows, the Company considers all short-term  debt securities  purchased
         with  a maturity  of three months  or less to be cash equivalents.  The
         balance of the  Company's  general checking  account  was  in excess of
         $100,000  as  of  February 29,2000  and the  account's  average account
         balance  is generally  in  excess  of  $100,000.  The  Federal  Deposit
         Insurance  Corporation  insures  all  bank  accounts  up  to  $100,000.
         Management  believes its exposure to loss is minimal  considering  only
         the amounts in excess of $100,000 are at risk and the  depository  bank
         is a well  established  national  bank and one of the nation's  largest
         financial institutions.

         Consolidation  - The  consolidated  financial  statements  include  the
         accounts of the Company and its wholly-owned subsidiaries, as described
         in Note 1 above. All significant intercompany accounts and transactions
         have been eliminated in consolidation.

         Depreciation  - The Company's  property and  equipment are  depreciated
         over their useful lives of five to nine years using  the  straight-line
         method.

         Income  Taxes - Income tax expense  includes  federal  income and Texas
         franchise taxes currently payable.  Deferred timing differences between
         the  reporting  of income and  expenses  for  financial  and income tax
         reporting  purposes  are  reported  as  deferred  tax  assets,  net  of
         valuation  allowances,  or as deferred tax liabilities depending on the
         cumulative  effect of all timing  differences.  See Note 3 for  further
         details.

                                      -8-

<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000


         Use  of  estimates  -  The  preparation  of  financial   statements  in
         conformity  with  generally  accepted  accounting  principles  requires
         management to make  estimates and  assumptions  that affect the amounts
         reported  and  contingent  assets  and  liabilities  disclosed  in  the
         financial  statements and accompanying notes. Actual results inevitably
         will differ from those  estimates and such  differences may be material
         to the financial statements.

         Earnings   (Loss)  Per  Share  -  Basic   earnings   (loss)  per  share
         computations  are calculated on the  weighted-average  of common shares
         and common share equivalents  outstanding during the year. Common stock
         options and warrants are considered to be common share  equivalents and
         are used to  calculate  diluted  earnings  per common and common  share
         equivalents except when they are anti-dilutive.

         Liquidation  of LPI  Entertainment,  Inc. - On September  7, 1999,  LPI
         liquidated LPI Entertainment, Inc. ("Entertainment"),  its wholly-owned
         subsidiary.  Entertainment's only remaining asset was a motor home with
         a cost basis of $173,775,  which was  transferred to the Company at its
         net book value.  Entertainment had been inactive since 1995. No gain or
         loss  was   recognized  for  financial   reporting   purposes  on  this
         liquidation.


(3)   LEASES

      The Company leases office space and various equipment under  noncancelable
      operating leases expiring in various years through 2004.

      Minimum future rental payments under noncancelable operating leases having
      remaining  terms in excess of one year as of February 29, 2000 for each of
      the next five years and in the aggregate are:
<TABLE>
<CAPTION>

         Twelve months ending February 28,                             Amount
         ---------------------------------                             ------

<S>                                                                  <C>
               2001                                                  $ 141,555
               2002                                                     12,790
               2003                                                      6,708
               2004                                                        559
               2005                                                          -
                                                                     ----------

         Total minimum future rental payments                        $ 161,612
                                                                     ==========
</TABLE>

      Rental  expense  consisted  of  minimum  lease  payments  of  $158,375 and
      $154,446  for  the years ended  February 29, 2000  and  February 28, 1999,
      respectively.

      Certain  operating  leases provide for renewal,  and/or purchase  options.
      Generally,  purchase options are at prices  representing the expected fair
      market value of the property at the expiration of the lease term.  Renewal
      options are for periods of one year at the rental  rate  specified  in the
      lease.

(4)   INCOME TAXES

      As of February 29, 2000,  the Company has unused  charitable  contribution
      deduction carryforwards of approximately $218,320.

                                      -9-
<PAGE>

      These charitable contributions carryforward will expire as follows:
<TABLE>
<CAPTION>

               Fiscal Year Ended
                  February 28,                                     Amount
               -----------------                               -------------

<S>                                                              <C>
                    2001                                         $ 129,110
                    2002                                            15,312
                    2003                                            36,239
                    2004                                            37,659
                                                                 ----------

                                                                 $ 218,320
                                                                 =========
</TABLE>

      Temporary timing differences  between the reporting of income and expenses
      for financial and income tax reporting  purposes give rise at February 29,
      2000, to a deferred tax asset of  approximately  $53,800,  which was fully
      reserved as of that date.

      Following are the components of this deferred tax asset as of February 29,
      2000:
<TABLE>
<CAPTION>

<S>                                                                <C>
           Charitable deduction carryforwards                    $  74,200
           Excess tax over financial accounting
               depreciation                                        (20,400)
                                                                  ---------

           Net deferred tax asset                                   53,800
           Less valuation allowance                                (53,800)
                                                                  ---------

           Deferred tax asset net of valuation allowance          $      -
                                                                  =========
</TABLE>

      The Company's effective income tax rate for the fiscal year ended February
      29,  2000,  is lower than what would be expected if the federal  statutory
      rate were applied to income from  continuing  operations  primarily due to
      the utilization of the Company's remaining net operating loss carryforward
      to partially offset current year taxable income.

      The  difference  between the Company's  effective  income tax rate and the
      United  States  statutory  rate is  reconciled  below for the years  ended
      February 29, 2000 and  February 28, 1999:  United  States  statutory  rate
      34.0% State of Texas statutory rate 4.5%.

      Expected combined rate                                38.5%         38.5%

      Benefit of utilization of net operating
         Loss carryforward                                  (1.0%)        (1.5%)
                                                           ------        ------
           Combined effective tax rate                      37.5%         37.0%
                                                           ======        ======



(5)     COMMON STOCK OPTIONS AND CHANGES IN CAPITALIZATION

      Conversion of debt to equity

      During November 1999, LPI converted its 5.25% note payable of $350,000 and
      the related accrued interest totaling $52,063 due to Descartes,  Ltd. into
      70,000 shares of common stock in Life Partners, Inc.

                                      -10-
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000


      Reverse Stock Split

      On November 30, 1999, the stockholders of the Company authorized a 20-to-1
      reverse  stock  split,   thereby  decreasing  the  number  of  issued  and
      outstanding shares to 500,000.

      Reverse Merger

      On January 18, 2000, the Company  acquired LPI in a share exchange whereby
      LPI became a wholly-owned  subsidiary of the Company. This transaction was
      treated as a pooling of interest for  financial  reporting  purposes.  The
      Company  issued LPI  stockholders  9,500,000  shares of common stock.  The
      Company  approved  transfer of its assets to LPI and the existing Board of
      Directors and Officers resigned.

      Acquisition of Treasury Stock

      On  January 21,  2000  the  Company's  principal  shareholder  contributed
      3,000,000 shares  of the Company's common stock  back to the Compant to be
      used in accordance with the terms of its Omnibus Equity Compensation Plan.
      Any  shares  not  optioned  by  January  31,  2001  would  revert  to this
      shareholder.

      Acquisition of Extended Life Services, Inc.

      On January 20, 2000, the Company acquired all of the outstanding  stock of
      Extended  Life  Services,  Inc.  for $500 in a  transaction  treated  as a
      purchase for financial reporting purposes.


(6)   OMNIBUS EQUITY COMPENSATION PLAN

      The Company has adopted an Omnibus Equity  Compensation Plan.   This  plan
      allows  the Company  to issue up to 3,000,000 shares of its treasury stock
      to its employees and agents at prices  and terms  to  be determined by the
      Company on the date of issuance.

      As of February 29, 2000,  the Company  had issued  1,157,772 shares  under
      this  plan for  which it  received notes  receivables  totaling $9,078 and
      recognized compensation expense of $2,500.

(7)   RELATED PARTY TRANSACTIONS

      The Company currently operates under an agreement with ESP Communications,
      Inc. (ESP), which is owned by the wife of the Company's  president.  Under
      the agreement,  ESP performs specified  administrative duties on behalf of
      the Company  concerning  post-transaction contact.  In addition,  ESP also
      provides facilities and various administrative  personnel for the Company.
      Either party may cancel the  agreement  with a thirty day written  notice.
      The Company currently pays ESP $7,000 on a monthly basis for its services.
      The Company recorded management services expense concerning this agreement
      with ESP of approximately $91,000 and $94,500 for the years ended February
      29, 2000 and February 28, 1999, respectively.

      On  January 21, 2000,  the Company  sold 907,772  of its treasury stock to
      employees  and  agents in  exchange for  notes receivable totaling $9,078.
      These notes bear interest at 8% per anaum and are due on January 21, 2002.


(7)   EARNINGS (LOSS) PER SHARE

      Basic  earnings  per share  amounts  are  computed  based on the  weighted
      average  number of shares  outstanding  on that date during the applicable
      periods.  The number of shares used in the computations  were 9,938,033 in
      2000 and 9,930,000 in 1999.

      Diluted earnings per share was not computed as of February 29, 2000 as all
      stock options and shares held for issuance in connection with the licensee
      stock  reward  program  were held as  treasury  stock and were  considered
      outstanding for purposes of the computation of basic earnings per share.

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<PAGE>


(8)   CONTINGENCIES

      During  the year  ended  February  29,  2000,  the  Company  entered  into
      settlements in connection with three lawsuits.  The  liability  associated
      with these settlements is included in accrued liabilities on the Company's
      financial  statements  as  of  February  29,  2000.   In  the  opinion  of
      management,  no other legal matters will have a  material  impact  on  the
      Company's financial statements.


(9)   SUBSEQUENT EVENTS

      The Company has  contracted  to  purchase an existing  office  building to
      house  its  corporate  offices.  The  contracted  price  for the  land and
      improvements is $800,000.  The Company anticipates that it will be able to
      finance $640,000 of this acquisition at 9.25% over 15 years.


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